3Avatar Company uses the indirect method to prepare its statement of cash flows. During 2014, plant assets with book value of $10,000 were sold for $14,000. Using the worksheet shown below, please enter the adjustments needed to record gain on sale of plant assets of $4,000.
BalanceTransactionAnalysisBalance
Panel A - Balance SheetDec 31, 2013Dec 31, 2014
Cash$ 18,000$ 21,000
Accounts receivable35,00031,000
Inventory25,00053,000
Plant assets, net90,000(b) 12,000
120,000
Total assets$168,000$225,000
Accounts payable$6,000$4,000
Accrued liabilities1,0002,000
Long-term notes payable90,00084,000
Common stock2,00030,000
Retained earnings74,000(a) 49,000113,000
Treasury stock(5,000)(8,000)
Total liabilities and stockholders' equity$168,000$225,000
Panel B - Statement of Cash Flows
Cash flows from operating activities:
Net income(a) 49,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation(b) 12,000
Gain/loss on sale of plant assets
Increase/decrease in accounts receivable
Increase/decrease in inventory
Increase/decrease in accounts payable
Increase/decrease in accrued liabilities
Net cash from operating activities
Cash flow from investing activities:
Acquisition of plant assets
Cash receipt from sale of plant assets
Net cash from investing activities
Cash flows from financing activities:
Cash receipt from issuance of common stock
Cash receipt from issuance of notes payable
Payment of notes payable
Purchase of treasury stock
Payment of dividends
Net cash from financing activities
Net change in cash
Control totals
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4Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown below, please enter the adjustments needed to record the increases and decreases in current assets (other than cash) and current liabilities.
BalanceTransactionAnalysisBalance
Panel A - Balance SheetDec 31, 2013Dec 31, 2014
Cash$ 18,000$ 21,000
Accounts receivable35,00031,000
Inventory25,00053,000
Plant assets, net90,000(b) 12,000
( c) 10,000120,000
Total assets$168,000$225,000
Accounts payable$6,000$4,000
Accrued liabilities1,0002,000
Long-term notes payable90,00084,000
Common stock2,00030,000
Retained earnings74,000(a) 49,000113,000
Treasury stock(5,000)(8,000)
Total liabilities and stockholders' equity$168,000$225,000
Panel B - Statement of Cash Flows
Cash flows from operating activities:
Net income(a) 49,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation(b) 12,000
Gain/loss on sale of plant assets(c ) 4,000
Increase/decrease in accounts receivable
Increase/decrease in inventory
Increase/decrease in accounts payable
Increase/decrease in accrued liabilities
Net cash from operating activities
Cash flow from investing activities:
Acquisition of plant assets
Cash receipt from sale of plant assets(c ) 14,000
Net cash from investing activities
Cash flows from financing activities:
Cash receipt from issuance of common stock
Cash receipt from issuance of notes payable
Payment of notes payable
Purchase of treasury stock
Payment of dividends
Net cash from financing activities
Net change in cash
Control totals